How this calculator works
This tool answers two questions most rules of thumb get wrong: Can I afford to drop this insurance policy? and Should I choose a higher deductible? It’s built on a piece of mathematics nearly 300 years old — Daniel Bernoulli’s 1738 analysis of insurance, the same expected-growth principle behind the Kelly Criterion used by professional investors today.
The key idea is that the right input isn’t your net worth, it’s your Risk Capital. This is the portion of your portfolio you could lose without changing how you live. We calculate it as your portfolio value minus your lower guardrail (the portfolio level at which your spending plan would have to change). For most retirees, Risk Capital is dramatically smaller than net worth.
To use it:
- Enter your portfolio value and your guardrail, or enter your Risk Capital directly if you know it.
- Choose an insurance type. The presets load realistic claim probabilities, which you can customize.
- Enter your actual premium (and home or vehicle value, where it applies).
- Read the finding. The Breakeven is the Risk Capital level where the math tips from favoring coverage to favoring self-insurance.
Then, you can stress test the results. Drag the guardrail slider and watch whether the finding holds. A conclusion that survives every reasonable assumption is one you can act on. One that flips as the slider moves means you’re in close-call territory, where your personal comfort with risk should make the final decision. The Deductible Decision tab works the same way for the question almost everyone faces at renewal time.
Only your financial plan can tell you your Risk Capital. And the findings are mathematics, not advice. They’re the starting point for a conversation, not the end of one.
Want the fine print? We’ve documented exactly how we built every default probability — the data sources, the total-loss math, and the judgment calls — here: [LINK: Where the Numbers Come From — Standard Homeowners] and [LINK: Where the Numbers Come From — Hurricane & Wildfire States].